Prior to the passing of the Patient Protection and Affordable Care Act (PPACA), insurers were permitted to charge higher premiums for individuals with preexisting conditions (e.g., cancer, heart disease, diabetes, etc.) because such individuals cost the insurer proportionally more in comparison to healthier members. This caused insurance for the sickest and oldest of Americans to be all but unaffordable in many cases. To combat this, individual plans offered via state and federally-administered exchanges are now limited in the scope of conditions that can be used in the pricing of a policy. For example, premiums can be adjusted upwards for individuals who are smokers and/or based on age. However, insurers cannot price the terminal cancer patient out of a policy. The most expensive premium for a given individual on a plan is also capped at three times the cheapest premium on the plan.
However, the fact remains that individuals with preexisting conditions still cost insurers more than healthy individuals. The government, worried that insurers may try to find ways to discriminate against the sickest individuals, implemented a program of risk adjustment. The premise is that insurers that can prove they are insuring a sicker population in comparison to other insurers will be eligible for transfer payments. Thus, insurers with healthier individuals will send money to those with sicker individuals.
In addition, every Medicare Advantage plan offered by insurers is given a rating according to a five-star quality rating system. The whole-number star rating is assigned by virtue of performance across over 50 individual metrics that come from the Healthcare Effectiveness Data and Information Set (HEDIS), the Consumer Assessment of Healthcare Providers and Systems (CAHPS), the Centers for Medicare and Medicaid Services (CMS), the Health Outcomes Survey (HOS), and/or the Independent Review Entity (IRE). The star rating may generally measure the quality of a plan and customer satisfaction with a plan.
Before the PPACA was implemented, insurers received bonus payments based upon the star ratings given to their plans. For example, insurers received a 5% bonus for 5 stars, a 4% bonus for 4 stars, and so forth. Under the PPACA, new performance payments have been added. For example, 4 or 5-star plans will get an additional 1.5% on top of the initial determined amount. These bonus payments increase over time, reaching towards 5% by 2014. Thus, the star rating system has gained more importance under the PPACA.
Over time, insurers can receive claims from healthcare providers. The claims can be used to determine transfer payments and star ratings. However, such a collection may include a large number of claims and/or related data that may be stored in an electronic data store or memory. For example, such a collection of claims may include hundreds of thousands, millions, tens of millions, hundreds of millions, or even billions of claims and/or related data, and may consume significant storage and/or memory. Determination, selection, and analysis of relevant claims and/or related data within such a collection may be extremely difficult for an insurer. Furthermore, processing of such a large collection of claims and/or related data (e.g., as an employee of an insurer uses a computer to sift and/or search through huge numbers of claims and/or related data) may be extremely inefficient and consume significant processing and/or memory resources.